Monday, April 16, 2018
By NEIL HARTNELL
Tribune Business Editor
Shell's plans to relocate its regional headquarters to the Bahamas were yesterday described by a Cabinet Minister as a sign of increased confidence in this nation's economy and government.
Desmond Bannister, minister of works, confirmed to Tribune Business that the multinational energy giant was "in the preliminary stages" of switching its operations to the Bahamas in a move that could create a major boost for local employment and this nation's standing in the global investment community.
"It's at a very preliminary stage, but they intend to focus their operations from the Bahamas," Mr Bannister said of Shell. "It's a good thing for the Bahamas, a good thing for the country. There's going to be... I can't tell you the figures now, but there's going to be quite some employment."
The move follows swiftly behind last week's Cabinet confirmation of Shell North America as the winner of Bahamas Power & Light's (BPL) long-term generation contract, which will result in it leading a consortium to construct a new 270 Mega Watt (MW) power plant - fuelled by liquefied natural gas (LNG) - at Clifton Pier.
Mr Bannister said Shell's potential headquarters move and the bid award were not linked, although some of the 18 rivals on the BPL contract may take a different view.
The Minister added that the energy giant's decision to establish a physical presence in the Bahamas was an indication of growing investor confidence in this nation as a result of the Minnis administration's election in May 2017.
"Obviously these companies, international brands, are a lot more confident in the Bahamas than they were before, and looking to bring their business here, which is an indication of confidence in the Government. It has to be," Mr Bannister told Tribune Business.
"It's a big company we've attracted to the country, and all Bahamians can be happy with what is going to follow with respect to Shell." The Minister referred Tribune Business to the Prime Minister, who is travelling, and the Bahamas Investment Authority (BIA) for further details.
Shell's potential relocation provides a major reputational boost for the Bahamas, especially given the timing and the circumstances in which this country finds itself.
For the multinational's move comes just as the Bahamas is being forced by the European Union (EU) and Organisation for Economic Co-Operation and Development (OECD) to focus on mandating that companies doing business in this jurisdiction have an actual physical presence here - and engage in 'real activities' - as part of their anti-tax avoidance drive.
Shell could thus act as 'the poster boy' for the Bahamas in making such a switch, with its global name and reputation encouraging other investors and companies to set up operations here. Many observers believe such 'physical presence' requirements will also increase Bahamian employment and boost economic activity.
The potential relocation also aligns with the Minnis administration's efforts to restructure and reposition the economy by diversifying beyond the 'twin pillars' model of tourism and financial services, and further liberalisation and deregulation.
It could also lend credibility to the Commercial Enterprises Act if Shell is making its corporate entrance under this legislation. Carl Bethel QC, the Attorney General, seemingly alluded to Shell's potential arrival during the mid-year Budget debate in the Senate.
"A large international trading conglomerate is looking to move its headquarters to the Bahamas," Mr Bethel said, without naming the company. "Such initiatives under the Commercial Enterprises Bill, and headquartering by international traders and high-tech companies, will hopefully continue to re-position the Bahamian economy, thus creating new highly-skilled and ultimately high-paying jobs throughout our economy."
Shell's business, if it does relocate to the Bahamas, will likely involve energy trading. And multiple Tribune Business sources yesterday suggested Shell's relocation plans may be further advanced than Mr Bannister indicated, with realtors having already been hired to find homes for around 30 expatriate workers - plus office space - in the Lyford Cay-western New Providence area.
Sir Franklyn Wilson, chairman of BISX-listed FOCOL Holdings, which owns/operates Shell's business in the Bahamas, said he was aware of reports about the potential Caribbean headquarters relocation and hiring of local realtors.
Emphasising that he was not speaking on Shell's behalf, and had not been informed of the move officially by the energy giant, Sir Franklyn said it had decided to move its regional headquarters back to the Caribbean following its relocation from Barbados to Houston several years ago.
"If true, it's a wonderful thing for the Bahamas," he told Tribune Business. "It's a wonderful thing when regional companies come here. These are high-paying jobs. They recruit very high-level people. They may not come here with Bahamians in these trading positions, but it opens up the possibility of Bahamians being trained to take advantage of the opportunity."
Sir Franklyn expressed hope that the Canadian-owned banks "take note" of Shell's move and consider switching their regional headquarters to the Bahamas. "I said the other day to the regional chief executive of one the three large banks that operate here: Why are you not headquartered in the Bahamas?" he recalled.
"He answered me: Why should we? I said to him that in one community here, Lyford Cay, we have 32 billionaires. You go where the money is. Barbados does not have that number in their entire country."
One source, speaking on condition of anonymity, told Tribune Business that Shell's presence would have an immediate "knock-on" effect for the economy, including the housing and retail markets and government taxes/fees.
"You get a big name brand, internationally-recognised brand relocating in the Bahamas, that's great news; fantastic," the source said.